© Reuters. FILE PHOTO: An oil refinery located on a branch of the Druzhba oil pipeline, which moves crude through the pipeline westwards to Europe, is seen near Mozyr
By Elena Fabrichnaya, Andrey Ostroukh and Gleb Gorodyankin
MOSCOW (Reuters) - Russia suffered a $1 billion shortfall in export revenues in the first two weeks of May after the discovery of contaminated oil disrupted pipeline flows to Europe, a Reuters calculation showed.
The final cost of the contamination may be several times higher, economists said, but it seems unlikely at this stage to dent the country's already fragile growth prospects or rock the rouble.
Crude export flows have been disrupted since April, when high levels of organic chloride were found in oil pumped via Russia's Druzhba pipeline, which serves Germany and some eastern European states.
There has been no official Russian estimate of the cost impact. In mid-May, Energy Minister Alexander Novak put the overall damage caused by dirty oil at below $100 million, but it was not clear exactly what he was referring to.
Reuters based its $1 billion estimate on export figures from sources familiar with energy ministry data and average monthly oil exports via Druzhba from last year, adjusted for changes in global oil prices.
Sources said that, compared to average April levels, Russia's pipeline system cut oil intake by 6% between May 1 and May 16.
Russia should be able to compensate for shortfalls by selling the tainted oil at a discount and getting more petrodollars from other oil exports thanks to recently increased crude prices, analysts said.
LIMITED MARKET IMPACT
It was not immediately clear how long it will take for Russian westbound oil supplies to reach to pre-crisis levels, but the operator of the Belarusian section of the Druzhba pipeline has said a full recovery including clean-up operations could take six months to complete.
The impact on Russia would be negligible if the situation is resolved soon, research firm Capital Economics said.
"(But) the contamination has also further tainted the reputation of Russia's oil sector and, if problems become more persistent, European demand could eventually shift towards other sources," it said.
In theory, if Russia were to cut oil output and exports by 1 million bpd over the course of a year, that would reduce gross domestic product growth by 0.8 percentage points, it added.
Economic growth is a sensitive issue.
President Vladimir Putin has ordered the government to bring the Russian economy into the world's top five by 2024. But activity slowed in early 2019 to bring the economy to the brink of recession.
Dmitry Dolgin, chief economist at ING Bank in Moscow, said this year's overall export revenue shortfall because of poor quality oil could hit around $5 billion. But that should not be critical given a current account surplus of more than $100 billion.
Assuming a figure of $1 billion, the current impact would be negligible for the currency market and for banks in Russia, given the size of their foreign currency reserves, said a financial market source close to the central bank.
Another source close to the government said the market impact would be close to zero.
The central bank and the finance ministry did not immediately reply to a request for comment on Monday.
Other relevant articles
[2019-05-17 15:20:19] Overstock.com CEO hits back at shareholders over personal stock...
[2019-05-17 10:25:26] Exclusive: Kazakhstan to seek damages from Transneft for tainted...
[2019-05-14 12:30:12] North Carolina to hold congressional primary after race tainted...
[2019-05-14 04:55:09] Indonesia central bank seen holding rate as U.S.-China trade spat hits rupiah:...
[2019-05-13 22:35:27] Stocks - Day of Reckoning Hits Stocks as U,S-China Trade War...
[2019-05-13 15:45:23] India April inflation hits six-month high; keeps rate cut hopes alive
[2019-05-13 15:15:30] India April inflation hits six-month high; keeps rate cut hopes...
[2019-05-13 09:40:30] Forex - Dollar Hits New 4-Month High as Trade Dispute Worsens
[2019-05-12 07:35:22] MLB roundup: Pujols hits 2 HRs, ties Winfield in hits
[2019-05-10 18:25:23] Lyft hits record low as Uber slumps in Wall Street debut
[2019-05-09 17:40:22] Forex - Yen Hits 3-Month High as Trade Breakdown Spurs Safe Haven...
[2019-05-09 15:40:24] U.S. goods trade deficit with China hits five-year low
[2019-05-09 13:15:25] U.S. campaign against Huawei hits a snag south of the border
[2019-05-09 09:35:11] Forex - Dollar Hits Four-Month High vs Yuan, Aussie on Trade Tension
[2019-05-09 07:40:11] China‚Äôs Inflation Hits Six-Month High in April as Pork Prices Jump
[2019-05-08 10:10:19] UK annual house price growth hits two-year high in April: Halifax
[2019-05-07 18:45:21] Bank of England hits the road to assess Brexit impact on economy
[2019-05-07 15:15:20] Veggie Burger Mania Hits Corporate America After Beyond IPO
[2019-05-06 15:25:31] U.S. fed funds rate hits near six-week low
[2019-05-04 09:05:22] Olympics: Boyle calls for reassessment of dope-tainted golds
[2019-05-03 02:20:17] Irish services growth slows in April as Brexit hits sales: PMI
[2019-05-02 21:05:24] Puerto Rico board hits Wall Street banks, bondholders with...
[2019-05-02 21:00:28] Oil Hits 1-Month Low as Traders Zoom in on Crude Build
[2019-05-02 20:10:22] Wall St. watchdog proposes plan to boost oversight of firms with...
[2019-05-02 03:00:19] Oil dips as U.S. output hits record, but global markets remain...
[2019-05-01 15:15:20] Hulu achieves rapid growth, hits 26.8 million paid subscribers
[2019-04-30 15:50:39] OPEC oil output hits four-year low in April on Iran, Venezuela:...
[2019-04-29 09:40:31] Forex - Euro Calm After Spain Poll; Trump Hits Petrocurrencies
[2019-04-27 15:25:18] China puts gentler face on Belt and Road, hits back at critics
[2019-04-26 15:30:26] Russia says it can fix tainted oil affecting Europe supplies soon
[2019-04-25 19:20:30] U.S. Crude Rally Stalls on Supply Worry; Brent Hits $75
[2019-04-25 10:25:35] StockBeat: Deutsche Bank - Commerzbank Merger Hits the Rocks
[2019-04-23 03:15:36] Asian shares steady after Easter weekend; oil hits 2019 highs
[2019-04-22 07:55:30] Asia stocks firm, oil hits 5-month peak on Iran sanctions report
[2019-04-22 03:00:36] Asia stocks firm, crude hits 5-month high on Iran sanctions report
[2019-04-17 15:05:17] U.S. purchase mortgage activity hits nine-year high: MBA
[2019-04-16 16:10:12] Global steel demand slows as China economy falters and trade war...
[2019-04-14 13:05:23] Nepal plane hits parked helicopter while taking off, killing three
[2019-04-12 19:20:21] Disney hits record on streaming plans; Netflix slips
[2019-04-10 17:40:24] Lyft Hits All-Time Low as Uber Turns Heads
[2019-04-09 10:00:17] European stocks edge lower as threat of U.S. tariffs hits Airbus,...
[2019-04-05 03:05:19] Dollar hits three-week high vs yen on trade optimism; U.S. jobs...
[2019-04-04 23:05:34] Bitcoin trading volume hits two-year low in March: report
[2019-04-02 14:25:22] Commodities - U.S. Crude Hits 5-Month High as Bears Suffer...
[2019-04-02 09:20:11] Bitcoin briefly hits $5,000 after 20 percent surge
[2019-03-31 10:35:25] 6.2-magnitude earthquake hits coast of Ecuador
[2019-03-30 13:25:19] Magnitude 6.1 earthquake hits Papua New Guinea: USGS
[2019-03-14 10:25:20] StockBeat: Brexit Drama Supports European Markets; FCA Hits Fund Stocks
[2019-03-14 09:35:33] Japans Netflix contender bets on youth-driven viral hits
[2019-03-14 05:55:13] Japan may cut economic view as China slowdown hits growth:...
[2019-03-13 17:10:16] U.S. Crude Hits 2019 High After Surprise Stockpile Tumble
[2019-03-11 15:20:28] Stocks - Boeing Hits Dow Even as S&P and Nasdaq Rise
[2019-03-06 17:35:25] U.S. auto fleet hits record high fuel efficiency in 2017
[2019-03-06 07:55:12] China stocks rally on stimulus hopes, weak GDP growth hits Aussie
[2019-03-04 04:30:30] Australia economy hits dry spell as incomes fail to flow
[2019-03-02 13:55:20] PayPal Hits A Record High; Should Investors Cash Out?
[2019-03-02 12:10:20] Bernie Sanders hits 2020 trail with a return to Brooklyn roots
[2019-02-26 20:45:23] Gold Steady on Trade Talks, Powell; Palladium Hits New Peak ...
[2019-02-25 02:05:32] Chinese firm behind the Amazon Coat hits jackpot in U.S., eschews China
[2019-02-24 03:45:33] Golf: Woods hits career low with putting woes on consecutive...
[2019-02-22 19:25:33] MarketPulse: Wayfair Hits Record High as Results Top Expectations
[2019-02-22 15:35:15] EU Ready to Target Caterpillar, Xerox if Trump Hits Cars, Source...
[2019-02-22 06:40:18] Malaysia Hits Deflation for First Time Since 2009 Global Crisis
[2019-02-22 01:35:24] Oil prices dip as U.S. crude output hits record 12 million...
[2019-02-21 12:30:16] Exclusive: Nigeria hits oil majors with billions in back taxes
[2019-02-21 12:25:21] Ronaldos Juventus Sinks as Loss Hits Champions League Chances
[2019-02-20 07:55:14] Asian millers turn to Argentina for wheat as drought hits...
[2019-02-20 06:20:17] Tokyos drive to expel zombie stocks hits small caps
[2019-02-19 11:40:12] WTO warns of global trade slowdown as indicator hits nine-year...
[2019-02-18 02:00:36] Oil hits 2019-high on OPEC supply cuts, U.S. sanctions on Iran and Venezuela
[2019-02-17 01:55:28] Oils Bullish Streak Continues as It Hits Biggest Week of 2019
[2019-02-15 20:25:21] Gold Hits 2-Week Highs, Remains at a Crossroads
[2019-02-15 10:05:19] Chinese Credit Growth Hits Record in January Amid Seasonal Surge
[2019-02-14 14:25:23] Oil Prices Rally in Risk-On Trade; Brent Hits 2019 High
[2019-02-13 10:35:14] U.K. Annual Inflation Hits Two Year Low of 1.8%
[2019-02-08 16:55:18] Forex - Dollar Hits New 2019 High as Trade Fears Hit Stocks
[2019-02-07 22:15:25] Vimeo revenue hits $160 million in 2018, paying users near 1...
[2019-02-07 09:50:15] Forex - Euro Hits New Two-Week Low as Market Braces for More Gloom
[2019-02-07 09:11:38] French trade deficit hits 60 billion euros in 2018 on energy...
[2019-02-05 11:25:18] MarketPulse Europe: Stoxx Hits 2-Month High as PMIs Rebound
[2019-02-05 09:55:12] Forex - Dollar Hits New Highs vs Euro, Pound as Brexit, Data...
[2019-02-04 11:15:32] Euro zone investor morale hits lowest in more than 4 years: Sentix
[2019-02-04 10:50:30] Euro zone investor morale hits lowest in more than 4 years:...
[2019-02-03 21:15:29] Four drown in Montenegro as bad weather hits Western Balkans
[2019-01-31 17:50:23] U.S. natgas use hits record high during freeze, utilities urge conservation
[2019-01-30 07:35:14] Gold Hits 8-Month Highs Amid U.S.-China Trade Worries; FOMC...
[2019-01-29 20:40:14] Gold Hits 8-Month Highs as Fed Decision Looms
[2019-01-29 17:55:18] U.S. consumer confidence hits one-and-a-half year low in January
[2019-01-28 17:45:32] Cryptocurrencies Lose $7.5 Billion as Bitcoin Hits 6-Week Low
[2019-01-28 13:55:28] Strike at Audi Hungary plant continues, hits production in...
[2019-01-25 10:55:23] Forex: Sterling Hits New Highs on Brexit Optimism
[2019-01-24 16:20:18] Cryptocurrencies Drop as Government Shutdown Hits Bitcoin ETF
[2019-01-22 13:25:10] Denmark to tighten rules for bank bosses as Danske Bank hits...
[2019-01-22 10:40:12] UK pay growth hits fresh 10-year high as employment soars
[2019-01-22 09:00:20] Forex - Dollar Firm as Pessimism over Global Growth hits Risk...
[2019-01-19 16:26:22] From Craft Brews to Car Bills, Shutdown Hits American Confidence
[2019-01-17 14:25:16] Oil Prices Tumble 2% as U.S. Crude Output Hits All-Time High
[2019-01-16 10:35:13] UK Annual Inflation Hits 2-Year Low amid Brexit Chaos
[2019-01-15 15:25:13] N.Y. Feds Empire State business index hits lowest since May 2017
[2019-01-12 16:40:19] U.S. Government Shutdown Hits Record Length With No End Seen